Markets Fall as Trade War Fears Mount

Markets Fall as Trade War Fears Mount
Stock markets have fallen around the world in the wake of President Trump’s latest tariffs threat to China. The Dow Jones closed down almost 1.2% or 287 points after Asian and European markets fell sharply earlier.

Mr Trump has threatened to put tariffs on an extra $200bn (£141bn) of Chinese goods, sparking fears of a trade war. The US president said the tariffs would be imposed if China “refuses to change its practices”.

He condemned China’s “unfair practices related to the acquisition of American intellectual property and technology” and added: “Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.”

The markets reacted badly with China’s Shanghai Composite faring the worst in Asia, ending the day down 3.8%.

In Europe, Germany’s Dax index was down 1.2% by the close and France’s Cac 40 had lost 1.1%. London’s FTSE 100 ended the day at 7,603.85, a fall of 27 points or 0.36%.

In the US, the losses on the Dow thrust the index into negative territory for the year, with firms with business in China, such as Boeing, driving the index’s sixth day of declines.

The S&P 500 and Nasdaq also fell, closing down 0.4% and 0.3% respectively.

“The fear from here is a continued back and forth, escalating trade penalties on both sides with a further negative impact on growth,” Stifel Chief Economist, Lindsey Piegza said.

Away from Mr Trump’s dispute with China, Russia said it would impose tariffs on certain American goods in response to the recent tariffs placed on steel and aluminium imports by the US.

Russia’s Economy Minister, Maxim Oreshkin, said the tariffs would target goods of which the Russians already had domestic equivalents.

Stock Markets Hit as Obama Authorises Iraq Air Strikes

Stock Markets Hit as Obama Authorises Iraq Air Strikes
Stock markets in Europe and Asia have fallen as worries grow about the impact of conflicts in Ukraine and Iraq. Shares were hit by news that US President Barack Obama had authorised air strikes against Islamic militants in northern Iraq.

In Japan, the benchmark Nikkei index fell by nearly 3% to close at 14,778 points, a two-month low.

In Europe, the FTSE 100 index fell 1% to 6,531.80, while Germany’s Dax and France’s Cac indexes saw similar falls.

Investors are worried the escalating tension will hurt global growth.

Just as the Asian markets started their trading sessions on Friday morning, US President Barack Obama announced he had authorised air strikes against Islamic militants in northern Iraq but would not send US troops back to the country. He said Islamic State (IS) fighters would be targeted to prevent the slaughter of religious minorities or if they threaten US interests.

No strikes have been made yet but the US has made humanitarian air drops to Iraqis under threat from the militants.

Even before news of possible air strikes in Iraq, markets had been under pressure this week because of worries over the situation in Ukraine, with reports that Russia was massing thousands of troops on the border with Ukraine. The Russian government also announced it was imposing a “full embargo” on food imports from the EU, US, Australia and some other countries, in response to sanctions over Ukraine.

On Friday, Australia’s Prime Minister Tony Abbott called Russia “a bully” and threatened stronger sanctions against the country, following the ban.

Australia’s S&P ASX 200 index shed 1.3% to close at 5,435 points.

China’s stock market escaped the falls seen elsewhere, with the benchmark Shanghai Composite index up 0.2% to 2,193, after the latest trade data showed a 14.5% jump in exports for July, compared with a year ago.

The surge in exports is fuelling hopes that strong external demand will keep the Chinese economy on the growth track for the rest of the year.

The latest data puts China’s trade surplus at a record $47.3bn (£28bn) for July.